How to Reduce Your Risk of Identity Theft, According to an Expert – Forbes Advisor
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Twenty years ago, the words “identity theft” may have conjured up images of shadowy figures rummaging through trash cans looking for bank statements and other documents. Today, with personally identifiable information readily available on the dark web, identity theft has changed dramatically.
The fraud is now massive, costing Americans billions of dollars every year, and can be very difficult for victims to undo.
But it’s not a hopeless situation – you still have the power to protect yourself from identity thieves.
The Rise of Identity Theft
The current era of widespread identity theft may have begun in 2013. Shortly before Christmas that year, Target announced that a massive data breach had wiped out the personal information of 70 million customers and 40 million debit and credit card numbers.
Suddenly, identity fraud was as close as your neighborhood Target store. And it’s become even more common since.
Personal data was compromised last year by a record number (1,862) of breaches, which increased by 68% compared to 2020, according to the Identity Theft Research Center. According to the Federal Trade Commission, Americans in 2021 lost $5.9 billion to fraud, most commonly identity theft. The cost to consumers increased by more than 70% compared to the previous year.
What do identity thieves do with the information they steal? Often they sell it.
The dangers when your identity is stolen
Full sets of identifying information, including name, address, date of birth, and social security number, are known as “fullz” in the criminal underground. The fullz of a US citizen goes for an average of only $8 on the dark web.
All the information a budding identity thief needs is just a few clicks away, without the hassle or stench of combing through a trash can. The thief doesn’t even have to live near the victim and may be on the other side of the world.
Armed with your data set, thieves can open a credit card online in your name. With a little more effort, they can fabricate fake documents, including a driver’s license, health insurance card, or passport.
And with these documents, scammers can become more audacious. For example, they could take out a mortgage or a line of credit on an existing mortgage, or use your health insurance to cover an expensive medical procedure. They may even steal your tax refund.
New scams target Covid aid and use ‘synthetic’ IDs
In my role as Principal Investigator for Threat Research at Agari by HelpSystems, I explored hundreds of email inboxes used by online scammers. Many of these inboxes contain unemployment insurance claims filed under different names in almost every US state.
Some of the inboxes show evidence of fraud against the IRS, Social Security and federal programs to provide Covid business loans, disaster relief, small business loans and rental assistance in the event of pandemic. The Secret Service estimates that up to $100 billion in Covid relief money has been stolen. Other sources put the total at $400 billion.
A relatively new variant of traditional identity theft is called synthetic identity fraud. A scammer starts with a stolen social security number, but creates a made-up name, address, and date of birth.
The fraudster then establishes credit with the fake ID, often by taking out a high-risk, high-interest loan. The scammer repays the loan, to establish a credit history for the synthetic identity. After several cycles, the synthetic identity has enough credit to request a stack of credit cards. The thief can now run the cards and disappear.
6 ways to reduce your risk of identity theft
Although identity thieves are getting more and more cunning, there are steps you can take to avoid being a victim. Here are six steps to guard against identity theft or quickly determine when a fraudster is trying to use your personal information.
1. Create a social security account online
Your social security number can be a goldmine for thieves; millions of nine-digit numbers are already available for sale on the dark web. The Social Security Administration warns that you should not routinely carry your Social Security card or say your number out loud in public. Officials also recommend creating a “my social security” account on the agency’s website, so you can monitor suspicious activity involving your Social Security benefits.
2. Protect your tax return
To prevent someone from filing a tax return on your behalf, the IRS urges you to set up what is called a Identity Protection PIN. This is a six-digit code that helps the tax authorities verify your identity when you file an electronic or paper tax return. This makes it harder for a scammer to use your social security number to file a false statement in hopes of obtaining a fraudulent refund.
3. Sign up for credit monitoring
Although you may not be able to prevent identity thieves from opening accounts in your name, a credit monitoring service can alert you to suspicious activity on your credit reports.
The best credit monitoring services may be free or may charge a monthly subscription fee.
They will send email or text notifications if a new account appears on your credit reports. If you see a new account that you don’t recognize and haven’t signed up for, you can quickly try to fix the problem.
4. Freeze your credit reports
A credit freeze prevents most lenders and creditors from accessing your credit reports, and they won’t open a new credit account in your name while the freeze is in effect. You can request a freeze from the three major credit bureaus, Equifax, Experian and TransUnion. Be warned that while a freeze is in place, you will need to request a temporary or permanent lift in order to claim credit.
5. Shred important documents
Some identity thieves still do things the old-fashioned way: rummaging through trash cans. They know that many people throw away documents containing sensitive personal information. A good shredder is a great investment for your home office. Be sure to shred bills after you pay them, letters from your bank, receipts, payslips, and medical records.
6. Beware of phishing
Phishing scams have been around for years, but still manage to trick consumers into giving up their personal and financial information, so it can be used for identity theft. With phishing, you may receive an email that appears to be from your bank telling you that you need to log in to your account online and update your information.
But when you click on a link, you are redirected to a copycat site that tricks you into entering your username and password. The Federal Trade Commission says a good way to protect yourself is to use multi-factor authentication, which requires you to enter an additional code or ID to log into a sensitive account.
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